The law of diminishing returns results in:
A. an eventually falling marginal cost curve.
B. a total product curve that eventually increases at a decreasing rate.
C. an eventually rising marginal product curve.
D. a total product curve that rises indefinitely.
Answer: B
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The self-correcting tendency of the economy means that rising inflation eventually eliminates:
A. unemployment. B. exogenous spending. C. recessionary gaps. D. expansionary gaps.
When a baker exchanges a pie for dollars, this is an example of dollars serving as
A. a unit of account. B. a store of value. C. a medium of exchange. D. barter.
Missouri can produce 10,000 tons of pecans per year or 5,000 tons of pears per year. Washington can produce 12,000 tons of pecans per year or 48,000 tons of pears per year. Which of the following statements is TRUE?
A) Washington has an absolute advantage in the production of both pecans and pears. B) Washington has a comparative advantage in the production of both pecans and pears. C) Washington has a comparative advantage in producing pecans and Missouri has a comparative advantage in producing pears. D) Both answers A and C are correct.
The key assumption of the Romer model that allows an explanation of sustained growth in output per person is ________
A) technology is nonrivalrous B) the total amount of labor is fixed C) some labor is devoted to producing new technology D) the saving rate is fixed